Netherlands Payroll Solutions

Contractors in the Netherlands can be set up in 2 ways, Employed and Self Employed.

The employed solution is the preferred model for the Netherlands when supplying personnel.

The use of self-employment is also allowed under Dutch legislation, however the engagement of freelancers (or ZZP’ers, as they’re known locally) has been under scrutiny by the authorities.

ZZP’ers must be registered with the Dutch Chamber of Commerce and they must operate under model agreements that have been previously approved by the tax authorities, with no subordination between the parties. The principle behind these agreements is that, both contractor and end client agree (and share the responsibility) for the contractor’s independent status/classification.

Tax year – The tax year is the calendar year for individuals

Immigration – Nationals of other EU/EEA and Switzerland can live and work in the Netherlands but are required to register with the municipality and obtain a BSN (burgerservicenummer).

Other nationals require a work permit; highly skilled workers who have a degree and are offered a contract for at least
one year, with a minimum annual salary of €66,873.60 (including 8% holiday allowance) can apply.

Workr Fees – €575 per month plus €350 set up fee. This applied to both the employed and self-employed solutions

Employment Summary

Registration – The employee must be registered with the social security system and income tax.

Contract – Indefinite term contracts can be used, however it is very tricky to terminate an employee in the Netherlands
under this type of agreement, so their use should be carefully considered.

Fixed-term contracts can be used, but they have a maximum total duration of 24 months (with a maximum of three
contracts issued during that period).

Social security – Employers social security contributions are spread across 5 different government departments each of
which has their own percentage and some of which are calculated against a maximum amount of salary, while others are calculated against the actual gross salary. An estimated percentage for employers social security would be 18.96%.

Again with employees social security contributions there are 4 different government departments each of which has their own percentage but an estimate would be 27.65%.

Tax – Progressive rates from 0% to 51.95%

There is an expatriate scheme that allows foreign employees to be paid a tax-free allowance of up to 30% of gross salary provided certain criteria are met.

Benefits – Holidays: 20 days paid annual leave.

Holiday pay: 8% of annual pay
9 national holidays
Sick pay at 70% at least of the normal pay
One month’s notice for employees with up to 5 years’ service
Severance/transition payments

Self-Employment Summary

Registration – The contractor will be registered with the Dutch Chamber of Commerce, they will receive social security, tax and VAT numbers.

Contract – Model agreement contract is required.

Social Security – 27.76%.

Tax – Progressive rates from 0% to 51.95%

Benefits – Depending on the circumstances, investment allowance, tax-deferred retirement reserve, self-employed
persons’ allowance and allowance for research and development work may apply before taxes. Costs such as telephone, internet, mobile phone, business software, transport (taxi, train, plane etc) and hotel, insurance premiums and training courses, are generally fully deductible. Entertainment expenses are only partially deductible.

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